EVERYDAY
EDGE
CONTENT
Highlights 2014 1
Sapa in brief 2
History/acquisitions/divestments 4
CEO statement 6
Vision, goals, strategies 8
Our three pillars 10
Operations 12
Market and competitors 18
R&D 20
Extrusion 22
Precision Tubing 27
Building Systems 29
Responsibility and governance EHS 32 Responsibility and governance risk 34
Board of directors’ report 39
Financial statements 43
Financial statements Sapa AS 73
Auditor’s report 82
Corporate governance report 83
Board of directors 85
Corporate management team 86
18
6
19
20
22
10
If there’s one thingcharacteristic of Sapa today, it’s a shared passion for aluminium and for the solutions this material provides to global challenges. A company with 23,500 employees and 100 plants operating in 40 countries offers great potential for learning and knowledge sharing for the benefit of our customers.
Our deep local knowledge in combination with Sapa’s global footprint is an unmatched advantage in the mar ket place, which is demonstrated through Sapa’s strong market positions.
Sapa strives for close and long-term cooperation with its custo mers, and offers technical support in their develop-ment processes.
The global sustainability agenda calls for an efficient transfor-mation to a low carbon economy, and Sapa is in the middle of this trend. More regulations are expected that will impact important customer segments.
The Sustainability Report for 2014 can be downloaded from sapagroup.com
Sapa’s aluminium extrusion operations deliver soft alloy products for a wide range of applications, mainly within the automotive, building, electrical, engineering and transportation sectors.
HIGH-
LIGHTS
2014
•
Maintaining our number-one position in North America and Europe through our unique network, R&D expertise, process capacity and strong customer focus.•
Strong demand in North America and stable markets in Europe.•
Restructuring program targeting synergies of NOK 1 billion by end of 2016, ahead of plan. About half of the target was realized in underlying results in 2014.•
More than 20 restructuring projects implemented, including two divestments, nine plant closures, and eleven major de-manning projects.•
In total, 1,550 people left Sapa as a consequence of restructuring projects by December 2014.•
Sapa’s underlying EBITDA increased by 76 percentin 2014 compared to 2013.
+76
%
Sapa’s underlying EBITDA increased by 76 percent in 2014 compared to 2013.
Our business concept is based on close cooperation with our customers, who are primarily located in Europe, North America and Asia. We provide extruded aluminium solutions for practi-cally any application. Our largest customer segments are the building and construction, automotive, mass transportation,
and engineering industries. We’re shaping a lighter future through a global reach and local presence, and the group is organized into three core areas: Extrusions, Building Systems and Precision Tubing.
SAPA
IN BRIEF
Operations in
40
countriesNet sales: NOK
~
46
billion~
23
,
500
employees>
50
%
of Sapa’s production is based on recycled aluminium75
%
of all aluminium ever produced is still in useSapa is a 50/50 joint venture owned
equally by Orkla ASA and Hydro ASA.
The formation of the new Sapa was completed
on September 1, 2013. Sapa develops, manu factures
and markets value-added profiles, profile-based building systems and
tubing solutions for automotive and HVAC&R applications in the lightweight
material aluminium. Our leading position is maintained through our unique
combination of local expertise, a global network and R&D capabilities.
SAPA IN BRIEF
8% OF THE EARTH’S
CRUST IS ALUMINIUM
OUR THREE CORE AREAS:
ENHANCING THE SUSTAINABLE VALUE OF ALUMINIUM
Eight percent of the earth’s crust is aluminium. This means the availability of raw materials is practically unlimited. Material properties such as light weight, high strength and resistance to corrosion contribute to its environmental qualities. It can be reused for the same purposes over and over again. Unlike many other materials, it does not lose its unique properties when recycled. Furthermore, recycling requires only 5 percent
of the original energy input. Together with suppliers, customers and peers we want to enhance the sus-tainable value of aluminium
by minimizing negative impacts along the value chain, and contributing to a more sustainable future.
5%
Energy use for productionof primary aluminium.
Energy use for recycling aluminium.
SAPA EXTRUSION | 22 PERCENT MARKET SHARE IN EUROPE | 28 PERCENT MARKET SHARE IN NORTH AMERICA
Sapa is the world’s leading producer of extruded aluminium profiles. Design solutions featuring aluminium profiles are used in virtually all industries. Sapa’s profiles replace other materials and design methods. Aluminium can be a substitute for steel, copper, plastic or wood. Extrusion can replace costly techniques, such as forging and injection molding.
SAPA BUILDING SYSTEMS | 19 PERCENT MARKET SHARE IN EUROPE
Sapa Building Systems is one of the largest European suppli-ers of building systems based on aluminium profiles. Solutions are provided for homes, offices and industrial buildings as well s systems for windows, doors, façades and glass roofs. Sapa’s building systems facilitate efficient, high-quality
construction work. This leads to lower building and operating costs. Energy efficient solutions often lead to an environmen-tally favorable solution.
SAPA PRECISION TUBING | 42 PERCENT WORLD MARKET SHARE
Sapa Precision Tubing is the globally leading supplier of alu-minium tubing solutions to the automotive heat-exchanger industry. Customers use Sapa’s aluminium tubing solutions in heat transfer applications for the automotive, HVAC&R and solar market segments, and utilize tube lines for carrying liq-uids or gases. The global footprint in manufacturing and tech-nical support allows support globally and regionally to cus-tomers with top-quality products and unmatched capability. By substituting traditional materials with aluminium, the cus-tomers can in many cases improve performance and the envi-ronmental footprint of their products.
HISTORY / ACqUISITIONS / DIVESTMENTS
A YOUNG
COMPANY
WITH
IMPRESSIVE
HERITAGE
50 YEARS OF CONTINUOUS GROWTH, 100 YEARS OF EXPERIENCE
HISTORY
1963–2014 THE BEGINNING
The first production facility in Vetlanda, Sweden Hydro signed agree-ment to build Karmöy
1963 FIRST PROFILES First sales of manufactured profiles 1967 EXTRUSION IN THE NETHERLANDS
The first extrusion company outside Sweden opened in the Netherlands Hydro builds first extru-sion plant outside Norway, in Wales, UK 1971 Net sales: 1.2 SEKm (8 months) 15
employees of which 6 adminis-tration and 9 on the shop floor
Sapa 1963
– a small company with great ambitions
1997
Hydro moves into South America. Acquires Acro Extrusaso de Metais in Itu, Brazil
2000
FOOTHOLD IN USA
Sapa gets its first foot-hold in America through the acquisition of Anodizing. Gränges changes name to Sapa
1999
SAPA HEAT TRANSFER IN CHINA
Sapa inaugurates its first rolling mill in China
2005
ACQUIRED BY ORKLA
Sapa is acquired by Orkla and delisted from the Stockholm Stock Exchange Hydro moves into Asia. Builds tubing plant in Suzhou, China
Sapa is a relatively young company, and has grown in the past 50 years from a single-press
operation to become the world’s leading manufacturer of engineered aluminium solutions.
The story begins with two entrepreneurs starting up production in Vetlanda in Sweden, where
Sapa began its journey towards becoming the world leader in extruded aluminium profiles;
and one of the three largest suppliers of profile-based building systems in Europe.
Hydro doubles extrusion capa-city in Europe by acquisition
HISTORY / ACqUISITIONS / DIVESTMENTS
The two founders, Lars Bergenhem and Nils Bouveng, were driven by a true entrepreneurial spirit. After working in the booming aluminium industry in the United States, they had decided that aluminium was the new material, which moti-vated them to start extrusion production in Sweden. They named their company Sapa – Skandinaviska Aluminium Profiler AB.
Meanwhile, in 1963, Hydro signed an agreement with Harvey Aluminum to build its first aluminium operation in Karmøy, Norway.
CHANGING OWNERSHIP
Over the next four decades the two companies developed in parallel. In 1971, Sapa Vetlanda took its first step abroad by establishing Scandex in Holland, and Hydro built its first extru-sion plant outside Norway, in Wales, UK. In 1976, Sapa was acquired by Gränges, which in turn was listed on the Stock-holm stock exchange in 1997. Meanwhile, Hydro doubled its extrusion capacity with the acquisition of five plants from Alcan in Europe. In 2000, Gränges changed its name back to Sapa, and was delisted when Norwegian Orkla acquired 100 percent of the Sapa shares in 2005. Orkla proved to be a growth-oriented and resourceful owner of Sapa, initiating a new era of structural transformation.
SHAPING A GLOBAL PLAYER
With a strong management in place, a joint venture was formed with Alcoa in 2007 in order to achieve a global leader-ship position. The Sapa/Alcoa joint venture almost doubled the size of the company. It was a brilliant opportunity to shape the industry, and created the largest aluminium profile com-pany in the world, with about 12,000 employees across three continents. The Sapa Group then continued to grow. In July 2009, Sapa acquired its biggest competitor in North America, Indalex. The deal made Sapa the market leader in North America and provided a springboard into the Canadian market. By optimizing the broad market experience and technical knowledge of the two companies, Sapa was able to bring forward new solutions that benefited both its customers and the aluminium extrusion industry as a whole.
ESTABLISHING A FOOTPRINT IN ASIA
Sapa established its first company in Shanghai, Sapa Heat Transfer Shanghai Ltd., in 1996, and the new aluminium rolling plant was put into operation in 1999. Sapa Profiles entered the market in 2004 and Hydro moved into Asia in 2005 when a tubing plant was built in Suzhou. In 2011, Sapa set out to establish a footprint within extrusions in Asia starting by acquiring an aluminium extrusion factory in Jiangyin, 150 kilo-meters from Shanghai, and the same year the company also signed in a joint-venture agreement with China’s state-owned aluminium company, Chalco, expanding its operations to Chongqing, another major Chinese city. Sapa has also acquired plants in Vietnam. A joint venture with Ben Thanh Group added a smaller extrusion plant located outside Ho Chi Minh City, and Sapa entered India with a fabrication operation in Bangalore. In addition, an extrusion plant just outside Ban-galore was acquired and has added important capabilities to the market. Building Systems established a sales office in India in 2009. Sapa’s Precision Tubing business inaugurated a welding factory in 2012 and in 2014 Sapa announced the investment in an aluminium extrusion press in Kuppam for the production of multi-port extrusions and drawn tubes for auto-motive and HVAC&R heat transfer applications. The company will become the first local manufacturer of such products in India. There is now a strong focus in Asia to develop the capa-bilities of the plants using Sapa’s network and resources.
GETTING READY FOR NEW CHALLENGES
In late 2011, Sapa’s owner Orkla announced that its future focus and core activity would be branded goods, while Sapa was identified as a non-core area. Orkla ASA and Norsk Hydro ASA agreed in October 2012 to combine their respective extrusions, building systems and tubing operations into a 50/50-owned joint venture. By combining these businesses Orkla and Hydro created today’s Sapa, a truly global leader in aluminium solutions with 23,500 employees and operations in more than 40 countries, Sapa and with the strength and ability to serve both local and global customers, and well positioned to capture future growth opportunities.
JOINT VENTURE WITH ALCOA
Aluminium profiles joint venture between Sapa and Alcoa: the world’s largest aluminium profile company is created
INDALEX IS ACQUIRED
Acquisition of Indalex (US and Canada) July 2009, a natural fit. Orkla becomes 100% owner of Sapa.
Sapa Building Systems esta-blishes a sales office in India.
2009
FURTHER STRENGTHENING IN ASIA
Sapa and Chalco (Aluminium Corporation of China Limited) form a joint venture to serve the Chinese rolling stock market. Each party will have 50% shareholding in the new JV. Sapa acquires one of the larger extru-sion plants in the Yangtze River Delta region outside Shanghai, China.
2011
More than 50%
of our people joined Sapa through
structural growth.”
Net sales: NOK 46,400 million ~23,500 employees
One
company
Orkla, Hydro createsSapa, the world’s largest a luminium solutions company
CEO STATEMENT
Sapa is uniquely placed to take the lead. We have the right people, the right skills, and the right experience and resources to develop the truly innovative solutions that our customers need and that the world demands. When Orkla and Hydro agreed in 2012 to merge their aluminium operations into a joint company, these two major players were competing in tough markets, resulting in declining profitability. This was not a sustainable situation. They seized an opportunity to create a global leader by combining their technical expertise, taking advantage of the obvious synergies, and establishing a cost-effective and customer-focused organization, better equipped for take out tomorrow’s profitable growth. The company’s first full year of operation was 2014, and we can already see that the industrial logic behind the joint venture is very sound. The organization has faced significant challenges, but despite difficult markets we have clearly improved our underlying operating profit, retained our customers and maintained our market share.
REALIZING THE SYNERGY POTENTIAL
Our expectation was to deliver synergies of NOK 1 billion within three to five years, and we established a plan based on a careful and methodical analysis. The plan involved a large number of restructuring projects, many of which were imple-mented or initiated during the year. We have divested two businesses and implemented nine major de-manning projects or part-closures. These processes have led to 1,550 people leaving our company. In addition, we have made savings by coordinating our activities in a number of areas, such as pur-chasing and logistics. This has required many tough decisions, but I know that the organization recognizes the need for these changes and understands that they are based on facts and careful consideration. We decided right from the start that all changes would be fully transparent, and that everything would be documented and explained at all levels of the organization. As a consequence, our dialogue with the unions and other employee representatives has been constructive throughout. A strong commitment from Sapa’s European works council greatly helped to create conditions for a constructive process,
and the Scandinavian model of cooperation has enabled us to resolve challenges in a controlled manner, allowing us to maintain our customer focus.
IMPROVEMENTS GIVE GROUNDS FOR OPTIMISM
The improved financial results make us optimistic, although we still have a long way to go. Our underlying EBITDA improved by NOK 800 million (+76 percent) from 2013, and over half of our NOK 1 billion synergy target was realized on the bottom line. The improvement isn’t only a result of restruc-turing measures, but also an improved cost position and mar-gin management. The largest improvement comes from Extru-sion Europe, with increased productivity and an enhanced cost position. The European market remains challenging, but the decline during the year was not as steep as feared and we were well prepared. Our extrusion business in North America benefitted from strengthened market demand, particularly in the automotive and building and construction sectors. We saw good volume growth in China, India and Vietnam, although the financial results were not in line with last year. Operating profit for Building Systems improved significantly despite continued market weakening in Europe. It is particu-larly satisfying that Sapa has managed to increase market share in its key segments under these circumstances. Preci-sion Tubing’s automotive markets have performed well, partic-ularly in China and the United States, and the European auto-motive market also continued to grow, albeit at a slower pace. The air conditioning segment has developed favorably as more producers switch from copper tubes to aluminium. More important, though, is that this substitution is being driven not only by price but also by greater cost efficiency and the better thermal performance of aluminium over copper. A significant achievement for Sapa during the year was when Panasonic Air Conditioning switched to aluminium and chose the most advanced tubing solution from Sapa. We are very proud of the recognition that Panasonic showed Sapa by rewarding our facility in Suzhou, China, with its ECO-VC Gold Award for Out-standing Performance.
TOWARDS A SUSTAINABLE
POSITION FOR A NEW
AND COMPETITIVE SAPA
If there’s one thing characteristic of Sapa today, it’s a shared passion for aluminium and for the
solutions this material provides to global challenges. Lighter vehicles, energy-efficient buildings,
reduced CO₂ emissions, innovative design, high recyclability – answers to the needs generated
by major global trends like urbanization, increased wealth and care for the environment and
world we live in.
CEO STATEMENT
SUSTAINABILITY AS A CORE ISSUE
Sustainability is at the very core of what we do, our products, how they are developed, how they are manufactured and what purpose they fulfil. Our aim is to contribute to a sustain-able future in a profitsustain-able, cost-effective and resource- efficient way by using aluminium solutions. Together with our customers, we address global challenges such as energy demand, population growth and climate change with new ways of thinking and groundbreaking innovations, and our business continuously strives for this progress. Employee health and safety is a fundamental sustainability issue that we never compromise on, so it is very disappointing that we saw a negative trend in work-related injuries at Sapa in 2014. There are inherent risks in our production, but no financial results can come at the expense of employee health and safety. Sapa is a results-oriented organization, and we work constantly to reduce risks, involving everyone in our efforts to enhance the safety of our working practices. This is an area of focus for both management and employees, and I personally spend a lot of time at our production-plants and during these visits we always address safety. If there has been an incident, I want to see where it occurred and I want to know how it hap-pened and what has been done to prevent similar incidents in future. I am very pleased to see all our hard efforts paying off, with a decrease both in number and severity of accidents in the recent months. Our safety ratio for the latest six-month period until March is the best ever, but we still have a long way to go. I believe it is possible to achieve zero accidents at work, as achieved in 2014 at 71 Sapa locations.
A SHARED PURPOSE AND CORE VALUES
Last year was not just about merging two businesses with somewhat different corporate cultures; it was also about people, and making sure that people from operations in more than 40 different countries will be able to work together as colleagues, share their expertise and learn from each other. In order to form a foundation for the way we work together, we established a set of values that we began to implement right from the outset, ensuring that these values have content and substance and are not just words on paper. We have spent a lot of time discussing the values and what they mean to us, and sharing examples and stories about how we live the
Sapa values in practice. We are continuing this discussion in 2015 with an engagement survey intended to provide the basis for more systematic ways of achieving our goals and living our values, as well as to demonstrate how we can best affirm the potential of each individual and pay attention to and utilize good ideas and knowledge among employees in the continu-ous improvement process. I firmly believe that our employees possess all the knowledge we need to improve our processes, our product portfolio and the safety at our facilities.
FAIR PLAY IN ALL RELATIONSHIPS
During the past year we have worked intensely with our core values of Accountability and Trustworthy. These are funda-mental values in relation to all the company’s stakeholders, including customers and suppliers. If we fail to act as one company in this respect, we put at risk the confidence of our stakeholders and our license to operate. This is our profound value base, and we must not take shortcuts in any part of our value chain or in our relationships with stakeholders. This message has now been disseminated throughout the organi-zation, through a large number of channels and in all local lan-guages, with in-person training, e-learning programs, articles on our intranet and much more. We have also organized com-prehensive internal anticorruption training in all markets and have begun to reach out to our suppliers through audits and a supplier declaration, based on our code of conduct, that will reach 80 percent coverage of spend by the end of 2015.
PROSPECTS FOR THE FUTURE
We will continue to build on the stable foundation that we have created. Although we have taken big steps forward we are still not delivering the necessary profitability. We will con-tinue to improve, together with our customers, by expanding our offering of sustainable products and value-adding services in terms of cost, energy efficiency, durability and performance. Aluminium is part of the solution to the challenges that the world is facing, and with our passionate employees and unmatched expertise we can deliver tomorrow’s aluminium solutions today. Aluminium is the future. Sapa is aluminium. Svein Tore Holsether
VISION, GOALS, STRATEGIES
By cooperating closely with customers, Sapa develops new applications and
solutions that create added value for our customers and owners. Cost and capital
efficiency in all aspects of operations will ensure that Sapa delivers cost-effective
solutions and profitable growth.
A TRUE
PARTNER IN
INNOVATIVE
SOLUTIONS
Our purpose – to shape a sustainable future through innovative aluminium solutions.
Sapa shall be perceived as the custo-mer’s most attractive partner through a combination of innovation, business knowhow and cost effectiveness. Our innovative aluminium solutions contrib-ute to shaping a sustainable future.
Our overall goal is to deliver profitable growth through good organic growth complemented by strategic acquisi-tions of companies and alliances that further strengthen our market posi-tions. Prerequisites for continued profit-able growth are cost and capital effi-ciency in all aspects of operations, and that Sapa remains an attractive, envi-ronmentally conscious, ethical and equal-opportunity employer.
OUR VISION
1
#
GOALS
PURPOSE
VISION, GOALS, STRATEGIES
STRATEGIES
CUTTING-EDGE EXPERTISE
Sapa is a global company with a local expertise and presence. Wherever customers are located, local resources, supported by global industrial specialists and technical experts, combine their skills to make a specific solution for customers, which meets their local needs.
OPTIMIZED MANAGEMENT TEAM
An organization with short decision paths ensures that man-agers of operating units receive necessary support in their business processes and efficient access to the Group’s com-bined resources. In addition to the CEO, group management includes all business area presidents and heads of the Group
CUSTOMER FIRST
We see the world through our custom-ers’ eyes. We antici-pate their needs and move fast locally and globally to deliver excellence.
TRUSTWORTHY
We do what we say we will do. We act with integrity, communicate openly and treat oth-ers with respect.
ONE COMPANY
We know that we work better when we work together. We share our knowledge and energy to ensure that we achieve our collective and individual aims.
ENTREPRENEURSHIP
We drive the business like it is was our own. We are agile and focused on results when carrying out new initiatives.
ACCOUNTABILITY
We take responsibility for our actions. We make decisions and stand behind the results, good or bad.
COMMON PURPOSE AND CORE VALUES
Aligning the organization in the same direction starts with a common purpose and core values, globally and locally.
Sapa is deeply rooted in the principles of integrity and high standards of business conduct. Sapa’s values describe how
we need to act in order to deliver on our purpose – to shape a sustainable future through innovative aluminium solutions. By doing this, we will change our industry. Getting there will require us to act according to our five values, which are:
functions Finance, Business Development, Legal, Communi-cations and HR. In this way, we handle the geographic spread and utilize the Group’s management resources optimally.
MOVING TOWARDS A CIRCULAR ECONOMY
Sapa’s applications are used in basically all industries. As the products reach their end of life, some of them return to the market through our own remelting facilities. More than 50 percent of Sapa’s production is based on recycled material and we strive to increase the in-house remelt capacity.
OUR THREE PILLARS
LEADING EDGE
STRATEGIC SOURCING (LESS) OPERATIONAL EXCELLENCE COMMERCIAL EDGE
SAPA’S THREE PILLARS
SAPA’S
BUSINESS
MODEL
– OUR WAY OF WORKING
A company with 23,500 employees and 100 plants operating in
40 countries offers great potential for learning and knowledge
sharing for the benefit of our customers.
The purpose of Sapa’s Business System is to establish com-mon processes to reach our goals. It is summarized in four key targets – all aimed at capturing the Group’s potential through a structured approach. The key targets are
• Create a common culture and understanding of where we are, where we are going and how we will get there • Establish a robust database for strategic decisions • Identify and roll-out best practice across functional areas • Provide group-level direction on strategic issues
At Sapa, we believe that it is enough to have a good idea once. After that, it is our job to make sure we share it with the whole Sapa family. That way, we make sure that our resources are effectively deployed, and ensure that we extract all the economies of scale that are available within the Group to give customers a cost-benefit advantage.
The Sapa Business System is based on three pillars: Strategic Sourcing, Operational Excellence, and Commercial Edge. The pillars manifest our determination to move from basic to excellence with what we define as key tools to succeed in each of these areas.
OUR THREE PILLARS
ALUMINIUM
OPERATIONS
APPLICATIONS
RECYCLING
BAUXITE
MINING PRODUCTIONALUMINA ALUMINIUM PRODUCTIONPRIMARY
SCRAPPING DISASSEMBLING REMELTING
PRODUCTION, INNOVATION, CUSTOMER DIALOGUE AND SOLUTIONS
PROCESS
WASTE POST-INDUSTRIAL WASTE AND POST-CONSUMER SCRAP
SUPPLY CHAIN ACROSS SECTORS
SAPA VALUE CHAIN
LEADING EDGE STRATEGIC SOURCING (LESS)
• The purpose of strategic sourcing is to reduce the cost of all purchased goods and services while maintaining or increas-ing the levels of service and quality. The target for LESS is to realize synergies adding value to Sapa and our customers. LESS is a combination of a central sourcing organization and sourcing experts throughout Sapa’s entities.
OPERATIONAL EXCELLENCE (OPEX)
• The purpose of OpEx is to permanently strive to improve Sapa’s service performance towards our customers and at the same time gain additional efficiency to improve Sapa’s cost performance. Amongst the key activities are training classes on Genesis (Sapa’s lean manufacturing business system), developing Sapa’s extrusion standards and ensur-ing global harmonization of best practices, and liftensur-ing Sapa’s global competence level in fields such as extrusion excel-lence, die technology, surface treatment and remelt. The Operational Excellence experts throughout Sapa’s entities work on the daily continuous performance of Sapa’s performance.
COMMERCIAL EDGE
• The purpose of Sapa Edge is to leverage all the useful com-mercial tools and best practices in use within the company worldwide. The toolkit is available to everybody through online platforms and social media collaboration. Its purpose is to strengthen the value we bring to our customers by being our customers’ one stop shop. Sapa Edge includes
a network of Sapa’s top commercial and innovative brains from across the globe, who meet and exchange ideas and customer requests on a regular basis.
Beyond the three strategic pillars of purchasing, operations and sales, Sapa is cautious to its responsibility as an industry leader. For this reason, Sapa has a strong focus on being at the forefront of innovation through leveraging its unmatched resources within R&D. Furthermore, Sapa has a dedicated global key account organization serving some of our biggest customers seamlessly across the globe. Both global key accounts and corporate and corporate R&D, together with the excellence centers of the three strategic pillars, are orga-nized under Sapa’s Corporate Strategy & Business Develop-ment departDevelop-ment. This demonstrates the emphasis Sapa puts on fully leveraging its economies of scale on both cost and revenue streams.
GLOBAL KEY ACCOUNT MANAGEMENT
Within global key account management, a dedicated organi-zation serves our most global customers seamlessly through a single point of contact, reducing costs in the value chain and easing the customers’ interface with Sapa. Regardless of whether our global key accounts need a profile in Shanghai or San Francisco, their global key account manager will help them. When they need to develop a new application requiring real innovative work, our global key account manager will find the expert engineer through searching all of our internal resources.
OPERATIONS
EXTRUSION: STRONG IMPROVEMENTS
The markets for Sapa’s extrusions businesses were relatively good in 2014. The main market regions, however, varied con-siderably. While the North American market showed strong demand throughout the year, with solid volume growth, the European markets slowed after a good start.
Synergies and restructuring initiatives in 2014 improved productivity throughout Sapa’s extrusion businesses and strengthened their overall cost position. Following an inten-sive period of plant closures and other restructuring, the extrusion business is now better equipped for the future with substantial cost savings implemented. Synergies and restruc-turings are ahead of the original plans. Depending on the development of the markets going forward, Sapa will regularly assess the regional capacity utilization in the group to reach acceptable profitability for the plants. Consequently, addi-tional restructuring projects may be raised in 2015.
Improvement in the European business was mainly due to the overall restructuring and synergy efforts, which led to a substantial increase in productivity, and the transfer of learning and experience is paying off. The North American business gained from the good market demand, especially within the building and construction and automotive segments. In this market environment, Sapa can improve
A SOLID
PLATFORM FOR
PROFITABLE
GROWTH
Sapa’s underlying EBITDA increased by 76 percent in 2014 compared to 2013. The
improve-ment was driven by synergies from the merger of Hydro Extruded Products and Sapa,
restruc-turing efforts, improved cost positions and margin management. The company also benefited
from a strong North American market and automotive market outside Europe. Sapa is aiming
to capitalize further on the improvement and
restructuring actions already undertaken and
to continue to increase the value-added
component of products and services.
OPERATIONS
margins and optimize its sales proposition. Sapa had volume growth in China, India and Vietnam, but its financial results overall in Asia were weaker than in the previous year. Sapa’s extrusion business is targeting further improvements in 2015.
BUILDING SYSTEMS: TURNING AROUND
Despite the generally declining market for building systems in 2014, underlying EBITDA for Sapa’s building systems business turned around and increased considerably compared to 2013. In addition, Sapa increased its market share within the core business segment. The improvement in underlying EBITDA was due to synergy and restructuring efforts, which have stream-lined the organization, and to significantly higher productivity. Internally driven improvements within purchasing and opera-tions also contributed.
Sapa Building Systems took various action including restructuring in strategic regions in Europe, especially in southern Europe. These actions created a solid platform for profitable growth when the market regains momentum. Price increases that were implemented in 2014 also benefited prof-itability. The target is to improve further through margin man-agement, procurement measures and further supply chain optimization.
PRECISION TUBING: GOOD BASE FOR FURTHER GROWTH
The automotive market in Europe grew in 2014, although not as strongly as in the United States and in China, where
volumes of SUVs and MPVs were robust. Only South America had a negative market development within the automotive segment. Development in the targeted non-automotive seg-ments, where Precision Tubing sells a large part of its volume, was driven by the cost increase of copper. This led customers to replace copper with aluminium tubes.
Precision Tubing strongly improved its underlying EBITDA due to higher volumes in Asia and North America, better mar-gins, and synergies in North America. Precision Tubing is plan-ning for volume growth in 2015, outpacing the expected mar-ket by continuing to offer innovative solutions, through copper substitution in non-automotive solutions, CO2 solutions in
automotive, and through growth in selected niches in indus-trial products. Asia will lead the volume growth with sound development in China’s markets. Furthermore, Precision Tub-ing will focus on realizTub-ing the effects of restructurTub-ing and syn-ergy projects, and on continued cost optimization throughout its operations.
Key figures – Sapa 2014 2013
Revenue, NOK million 46,384 42,270 Underlying EBITDA, NOK million 1,916 1,091 Underlying EBIT, NOK million 652 –89 Sales volume (kmt) 1,399 1,366
OPERATIONS
Sapa has five business areas organized into three core areas: Extrusion, Building Systems and Precision Tubing. In addition, Extrusion is divided into three geographic business areas.
CUSTOMER NEEDS
Sapa provides local, regional and global customers with alu-minium extrusions, heat transfer tubing and extrusion-based building systems. We pursue opportunities to increase our share of the market by offering superior value and targeting advanced market segments. We deliver solutions that are often developed in collaboration with customers and which are always adapted to the customer’s needs.
WORLDWIDE GROWTH
Sapa is the largest worldwide aluminium extrusion company, with 100 sites in more than 40 countries and turnover of NOK
46.4 billion. Prior to the joint venture in 2013, both Hydro and Sapa built their extrusion activities primarily through mergers and business acquisitions. These include Acro Extrusaso, Alcoa Soft Alloy Extrusions, Alufit, Domal, Indalex, Jiangyin Haihong, Technal, Thule, Vijalco and Wicona. Sapa employs 23,500 people.
STREAMLINED AND DYNAMIC
Sapa’s short decision paths ensure that managers of operat-ing units receive support in the business process and efficient access to the group’s combined resources. Since the estab-lishment of the joint venture, Sapa has been undergoing structural changes to strengthen its competitiveness in the market. This includes optimizing production through the clo-sure and divestment of plants and operations, and synergy capturing in the new company.
FIVE BUSINESS AREAS
Sapa’s five business areas are Extrusion Americas, Extrusion Asia, Extrusion Europe, Building Systems and Precision Tub-ing. Each business area is headed by a president who is also a member of the corporate management team (CMT) alongside the Group President & CEO and the heads of the group func-tions Business Development, Communication, Finance, HR, and Legal.
Operating units primarily report in a regional context, with regional managers reporting to their respective business area president.
ORGANIZA-TION
AND
STRUCTURE
Sapa’s business concept is based on close
cooperation with customers. Our customers
are primarily located in Europe, the Americas
and Asia. The largest markets are the
automo-tive, building and construction, engineering
and transport industries, and domestic and
office interiors.
OPERATIONS
GLOBAL AND LOCAL
Several key support functions work across business areas and regions. Sapa has a centralized function for research and development, and business-specific local and regional cen-ters for application development. In total, these units employ approximately 1,000 engineers and form the backbone of Sapa’s technological competence base.
Sales and marketing teams in each region play a central role in strategic accounts and development, working with global key account managers in Sapa’s commercial strategic initiative, known as Edge.
Similarly, Operational Excellence, which aims for world-class manufacturing, and Strategic Sourcing, the company’s procurement initiative, are managed at Group level.
Extrusion Europe
John Thuestad Extrusion AmericasPatrick Lawlor Extrusion AsiaKeith Jones CEO Svein Tore Holsether
Building Systems
Karsten Lundgaard Precision TubingSalvador Biosca Strategy & Business
Development Tolga Egrilmezer General Counsel Florian Krumbacher¹ Communications Erika Ahlqvist HR & Integration Lene Trollnes EHS Brian Jones² CFO Karl Eichinger
¹ Florian Krumbacher will replace Tom Melbye Eide from April 30, 2015 as an interim solution.
² Head of Environment, Health & Safety (EHS) reports directly to the CEO but is not part of the corporate management team.
CORPORATE MANAGEMENT TEAM
CASE STUDY
CASE STUDY
STRONG CONSOLIDATED PLATFORM ESTABLISHED
When the joint venture between the Sapa and Hydroalumin-ium businesses was announced in October 2012, the owners communicated that NOK 1 billon in synergies would be real-ized over three to five years. The synergies would come from coordination of activities in areas such as purchasing and logistics, reduced overhead costs above plant and restructur-ing of operations, primarily in Europe.
Both companies had a need to reduce capacity after sev-eral years of market decline in Europe, and by joining forces the potential to optimize their footprint was evident.
Immediately after the deal was closed, an extensive pro-cess was initiated to analyze all possible options, and no area was excluded. To make sure that all facts were evaluated and all options considered, a structure was established with deci-sion gates, proper documentation and involvement from key stakeholders.
Special attention has been given to involving employee representatives throughout the entire process. A European works council with representation from all countries with more than 100 employees was immediately formed. Of the 42 participants, a smaller working committee of 4 members was elected and given a mandate to review the restructuring pro-posals before any final decisions were made. The working committee has also held regular meetings with management to discuss the restructuring process and plans, and both employee representatives on the Sapa Board of Directors are co-opted at the committee’s meetings. However, restructuring takes place locally. Good and open communication at local level between management, local employee representatives and unions is the key to ensuring proper and fair realization.
More than 20 restructuring projects had been implemented by the end of 2014, including two divestments, nine plant clo-sures and eleven part-cloclo-sures or major de-manning projects. In total, 1,550 people were affected by these changes. Of these projects, two were in the USA and the rest in Europe.
Considerable efforts have also been made in sourcing, with supplier agreements consolidated and benefits of scale uti-lized. The establishment of a new organization above-plant, with the head-office and business area staff functions stream-lined compared to before the joint venture, has also contrib-uted to the synergy savings in 2014.
The restructuring program is ahead of plan both operation-ally and financioperation-ally. Of the targeted synergies of around NOK 1 billion by end of 2016, about half were realized in the under-lying results in 2014. Finspång Magnor Tönder Harderwijk Drunen Seneffe Lichtervelde Eupen Raeren Hoogezand Birtley Tibshelf Cheltenham Bedwas Perfialsa Avintes Pinto Miranda Eural Navarra La Selva Santa Olivia
La Roca Puget Tolouse Albi Chateautox Luce Pinon Ornago Chisineu-Cris Trzcianca Chrzanow Ziar Kofem Feltre Nenzing Bellenberg Offenburg Rackwitz Haticon Uphusen Hanover Bolzano Fossanova Atessa Workington Vetlanda Sjunnen
MORE THAN 20 RESTRUCTURING
PROJECTS IMPLEMENTED
Operating companies Divestments
Plant closures + 2 plants out of map (Miami, and Guelph)
TAKING CONTROL OF OUR DESTINY
“I have worked for Building Systems for 26 years – previously at Hydro – and I also have extensive experience in trade union work, including as chairman of the local works council at Hydro and Hydro EWC since 1996. I became a member of the reference group in October 2012, along with two Swedish and one Norwe-gian union colleagues. Following the launch of the new Sapa I was elected as chairman of the Sapa European Works Council.The entire process has been characterized by frequent com-munication with the company management. No information was hidden and all questions were answered clearly and to the point. When examining our market situation, it was obvious that some-thing had to be done. There was no room for discussion as to whether or not the economic system we operate in was right or optimal, and we had to deal with today’s realities.
During my career my only experience is from a Scandinavian, and locally a German, style of leadership so I cannot judge whether or not this is unique. However, I have the impression that there is greater emphasis on consensus and there is an approach to communication with each other that I like. It is not always easy to get colleagues to understand that this is how it works, and that there is no hidden agenda. From our side, we can always bring rational arguments to the working committee, and I feel that the company is sensitive to this and has great awareness of the difficulties.
The process has run more or less smoothly, depending on the country and what the situation looks like around the local plant. There are major differences in national regulations, laws and contracts, and it may be difficult to find a new job in some local communities. Social safety nets also vary from country to country. In Germany, there are large differences in regional eco-nomic activity but at the same time social safety nets are stron-ger than in many other places. In some regions the business logic has been less well accepted, but my impression is that this is not primarily due to a lack of understanding of the business rationale, but rather because people feel personally vulnerable.
Sometimes we also noticed a concern from local manage-ment about allowing union representatives to be involved and to take responsibility for business decisions. In Germany, we have long been accustomed to having employee representatives on company boards, and it creates a calmer atmosphere.
It was right to form the joint venture; otherwise both companies would have been forced into independent action, which would have heightened competition even more. This way, we created a process in which we could control our destiny together.
I do not believe that we have seen the end yet, and changes in our busi-ness environment will continue to happen and will require adaptation and new ways of thinking. But for now, we can focus on the opportunities and we can afford to invest in the future.” Dietmar Gärtner
Chairman of the European Works Council, Sapa
A SAPA SPIRIT OF TRANSPARENCY
“I have been a Board representative in the original Sapa for 16 years, and now have the same position in the merged com-pany. It has been 16 years of almost constant change, with the transfer of ownership, exchange listing, delisting and now the formation of the Sapa joint venture. Over this period, the company has grown from 4,000 to around 23,500 employees.I have always believed that we have implemented major changes in a good way, that there has been a Sapa spirit of transparency and open discussion. It is not always that we agree, but both parties have always had the same objective, to find a solution. Our employees and their organizations are bearers of a great amount of valuable knowledge and experi-ence, and I believe this has also been utilized in a good way during this time, as the merger was being prepared and as the restructuring program has proceeded.
As early as in autumn of 2012, a group was formed that included two union representatives, one from from Sapa and one from Hydro. We met once a month to discuss what we hoped to achieve provided that the competition authorities approved a joint venture. There were issues such as the establishment of a European works council (EWC) and Board representation in the future company. This was good prepara-tion, which included forming an extended EWC with the broadest possible representation. The EWC was in place and could be convened just days after the joint venture agreement entered into force.
At the first EWC meeting the delegates were provided with information by members of the Board, and a working commit-tee was established with four regular members plus myself and my colleague Tor Egil Skulstad from the Sapa board. We met once a month, and the discussions that took place stemmed from the realization that two major competitors in the same markets were not sustainable in the long run. This company will be the largest and strongest, but it was neces-sary to downsize in order to create conditions for growth. Thanks to the open environment, there was an understanding that there was a need to take action.
It is a sad fact that 1,550 colleagues have lost their jobs, but it is important to state that it was not just a matter of shrinking the entire business, but tailoring a better fit in view of the circumstances. When presenting such a message, it must be factually substantiated and
it is important to have good answers to the question why, because in all human beings the first reaction to change is resistance.”
Kenneth Hertz
Employee Representative, Sapa Board of Directors
MARKET AND COMPETITORS
While the local customer does not have an immediate need for a global supplier, there will still be benefits from the net-work of Sapa plants.
Sapa Group is organized around three lines of business: Extrusion, Precision Tubing and Building Systems. Extrusion is the largest business area with 78 percent of the Group’s revenues, followed by Building Systems (14 percent) and Precision Tubing (8 percent).
Sapa’s broad exposure to many end-markets makes the company less dependent on the development of specific market segments. Sapa’s market offering includes automotive applications such as roof rails and trim, body-in-white and crash boxes, transportation applications such as bodywork in subway cars, trailer parts and rolling stock body structures,
FRAGMENTED
AND HIGHLY
COMPETITIVE
MARKETS
Sapa’s markets are characterized by
fragmen-tation and many local suppliers. Sapa is hence
one of the few major players in the industry.
However, competition is fierce, with local
suppliers that are well established in their
respective markets, making Sapa dependent
on its very skilled salesforce and technical
re sources. Our deep local knowledge in
com-bination with Sapa’s global footprint is an
unmatched advantage in the market place,
which is demonstrated through Sapa’s strong
market positions.
SAPA’S BUSINESS BY GEOGRAPHY
SAPA’S BUSINESS BY MARKET
■ Europe, 56%
■ North & Central America, 38% ■ Asia incl. ME, 4%
■ South America, 2% ■ Building & Construction, 36%
■ Industrial, 18% ■ Automotive, 15% ■ Transportation, 15%
■ Distribution/other, 15%
MARKET AND COMPETITORS
SUSTAINABILITY TRENDS ARE SHAPING SAPA’S BUSINESS
The global sustainability agenda calls for an efficienttransformation to a low carbon economy, and Sapa is in the middle of this trend. More regulations are expected that will impact important customer segments.
The automotive industry is driven by fuel economy standards, not at least in the US with its CAFE regulations, and the EU legislation that sets mandatory emission reduction targets for all new cars. Reducing vehicle weight is the main contribution to this improvement.
From being a material primarily for the premium auto-motive segment, aluminium has now entered the mass market. Ford announced in 2014 that its redesigned F-150 pickup truck will weigh 317 kilograms less than the current model. Aluminium is a major contributor to achieving the weight reduction. The F-150 is the best-selling pickup truck in the US as well as the country’s best-selling vehicle overall.
Also in place is an EU directive requiring that by 2020 all new buildings will be nearly zero-energy. The Power-house consortium in Norway shows that through close and early cooperation between relevant disciplines it is possible to even achieve energy-positive buildings. Sapa contributes to the consortium with know-how and solu-tions within energy-efficient window and façade systems, with integrated photo voltage solutions.
Other areas where Sapa can leverage on sustainability trends are the railway industry, which will build the super-efficient systems for public transport in the world’s grow-ing mega-cities, and the ongogrow-ing copper to aluminium substitution within the HVAC&R segment.
complex building and construction solutions, as well as preci-sion tubing applications for the heating, ventilation, air condi-tioning and refrigeration (HVAR&R) industry.
KEY MARKET DEVELOPMENTS
For Sapa Extrusion, North America and Europe are still the dominant markets, with Extrusion Asia representing a small, although substantially growing, revenue in 2014.
In 2014, the North American market showed the strongest growth, with an 8 percent increase in consumption. The North American automotive market grew moderately in terms of vehicle sales, but a strong focus on lighter weight and improved fuel efficiency is driving demand for aluminium extrusions.
In South America, economic development in Brazil and Argentina, the region’s two largest economies, is challenging, and a sharp rise in imports has contributed to the difficulties. As a countermove, the Brazilian government has initiated an investigation of potential price dumping by Chinese suppliers.
The automotive market in Europe performed well, driven by the same trends as in North America; lighter weight and better fuel efficiency. On the other hand, building and con-struction, which is the largest segment for Extrusion Europe, remained cautious although stable.
Market developments in India and Vietnam remained positive through 2014.
After two decades of strong investment driven GDP growth, the Chinese economy is now entering into an era of slower consumption-driven growth. The large government stimulus packages put in place after 2008 not only helped stimulate demand, but also led to a significant capacity increase in the extrusion industry. With growth now showing somewhat lower rates, especially in the building and construction segment, more extruders will try to enter the higher-end industrial and automotive segments, which makes a clear niche strategy vital for success.
The most important segment for Precision Tubing is auto-motive, which makes up for roughly 74 percent of the busi-ness area’s volume. Within automotive, the Greater China market shows the strongest growth within light weight vehicle production, making the Precision Tubing operation in Suzhou a key asset to Sapa.
The second largest market for Precision Tubing is HVAC&R, which grew by around 50 percent in 2014. The Asian and North American markets for HVAC&R remain firm and driven by the customers replacing increasingly expensive copper with aluminium.
Building Systems is still facing challenging markets in Europe, but the overall development remained unchanged in 2014, albeit at low levels.
R&D
Sapa’s 1,000 engineers – most of them with material science, physics, chemistry, or mechanical engineering backgrounds – are involved in research and application development throughout the world. Their focus is on aluminium products and processes in segments like automotive, transportation, and building and construction.
Sapa Technology is the group’s research and development hub, located in Finspång, Sweden. Sapa Technology concen-trates on long-term development of the enabling technologies for value creation, as well as shorter-term and more practical aspects such as productivity and cost.
The Finspång site is complemented by application centers covering nearly 40 locations:
•
Application Development Asia•
Building Systems R&D•
European Product Development•
North American Technical Center•
Precision Tubing Technology CenterTeams collaborate across geographies, time zones and areas of expertise to implement customer projects and to solve cus-tomer issues with on-site technical service. The ultimate goal is faster, better and more effective development support to our customers.
UNMATCHED
R&D
NETWORK
Sapa strives for close and long-term cooperation with its custo mers,
and offers technical support in their development processes. If Sapa
cannot identify any value for a customer or for its future business,
we will advise against a project. Every working day of the year, Sapa
initiates a new development project.
SAPA TECHNOLOGY DEVELOPS NEW CRASH MANAGEMENT ALLOY
Product properties depend on material properties, and on geometry, for example in the development of new alloys for automotive crash management applications. Finding a fully functional C28 crash alloy for Audi meant finding the right raw material and chemical composi-tion, and the right process – how the material is cast, homogenized, extruded, quenched and aged. Utilizing in-house competence, Sapa Technology developed the new 6000-series alloy through microstructure design and process control.
CASE INNOVATION
CASE STUDY
CASE STUDY
SAPA STEPS UP TECHNICAL TRAINING
Increased knowledge about light metal is
driv-ing the use of aluminium solutions, and Sapa
is one of the educators leading the way. In
2014, the company provided more than
37,000 hours of technical training to external
stakeholders worldwide – more than twice the
amount provided in 2013.
The growth occurred in all of Sapa’s business areas and in all regions. Most of the training is offered free of charge to cus-tomers, product designers and developers, technicians, engi-neers, and architects across markets and industries. Only in a handful of countries are participants required to pay a small fee according to government regulations.
The tutoring takes place in a variety of ways and settings. The core of Sapa’s training offering is the Profile Academy. In 2014 Sapa arranged about 30 events in its Profile Academy scheme, with nearly 900 participants in all, in addition to doz-ens of customer and market-specific technical workshops, mainly in Europe and the United States.
Sapa held its first Profile Academy in Sweden in 1996 and the company has been fine-tuning the concept ever since, keep-ing the style modern and the information fresh. Up until now, some 5,500 people have attended in Europe, and another 2,000 in North America.
The two-day Profile Academy must include a number of mandatory sessions for the event to be designated as such. As an example, the agenda must contain a group workshop which results in the development of a design for a product using extruded aluminium. Participants have access to prod-uct designers, metallurgists and other internal and external specialists.
In addition to its general extrusion-related sessions, which accounted for about 40 percent of the technical training hours, Sapa hosted another 1,900 external stakeholders in events related directly to its aluminium tubing and building systems businesses.
In 2014, the building systems sessions were mainly prod-uct-related and arranged throughout Europe, while Sapa’s aluminium tubing business prioritized training on high-perfor-mance tube alloys and coatings for industrial heat exchange applications.
Conservatory application training at Sapa workshop in Miranda de Ebro, northern Spain.
From left to right: Iker Morilla, Carpinteria Perianes y Palleja from Vitoria, Luis María Merchán, Goierri Aukera from Ordicia, Jose Carmona, Sapa Building Systems from Iberia, Francisco Tarca, Carpinteria Alce from Huercal de Almería, Gregorio Milán, Carpinteria Alce from Huercal de Almería.
Sapa operates some 70 extrusion plants and 20 casthouses within its network. The aluminium remelted in these units is cast into extrusion ingot and used by our plants to extrude new products.
Sapa’s extensive worldwide network is unique to the extru-sion industry, one in which local customers are generally served by local suppliers and where business is characterized by short-term contracts for a large number of small orders from
EXTRUSION
GLOBAL
REACH,
LOCAL
RESOURCES
Sapa’s aluminium extrusion operations
deliver soft alloy products for a wide range of
applications, mainly within the automotive,
building, electrical, engineering and
transpor-tation sectors. Our extrusion activities are
organized into three geographic business
areas: Extrusion Americas, Extrusion Asia
and Extrusion Europe. Sapa’s market shares
are 22 percent in Europe and 28 percent in
North America, with footholds in Argentina,
Brazil, China, India and Vietnam. The
busi-ness areas are present in 28 countries,
employing more than 18,000 people.
SALES 2014 SHARE OF GROUP TOTAL
79%
NOK 36,885 million NUMBER OF EMPLOYEES SHARE OF GROUP TOTAL78%
18,399 EXTRUSION MARKET SHARES28%
in North America and22%
in EuropeEXTRUSION
small to medium-sized customers. A large part of the products delivered by Sapa include value-adding processes, such as machining and surface coating, and are produced to order. We only market a limited amount of commodity-type products.
VERSATILE AND LIMITLESS
Extrusion use is increasing as more industries discover the benefits of aluminium in new applications. The metal is sub-stantially lighter than copper and steel. Other benefits are its low density and high strength-to-weight ratio. It is easy to shape into advanced forms, it has a smooth surface finish and it is 100 percent recyclable. Equipped with this versatility, only the imagination limits the use of extrusions.
Sapa delivers profiles from 5 millimeters and 30 grams per meter, to 750 mm and 70 kilograms per meter. The maximum diameter is 440 millimeters.
ADDING VALUE
Sapa adds value to aluminium extrusions in many ways, pro-viding customers with expertise and the capacity to allow them to concentrate on their own operations.
The natural appearance of an extrusion is acceptable for many applications, and due to the metal’s properties, surface treatment is rarely necessary for corrosion resistance. How-ever, surface treatment can improve the surface structure of a profile, its color, hardness, reflectivity and electrical insulation.
Anodizing produces a decorative, soilrepellent and corro -sion-resistant surface. Powder coating is used to apply color to aluminium profiles, because it withstands high impact and abrasions considerably better than wet coating. Furthermore, it has good formability and is suitable for use in open air due to high UV-radiation and corrosion resistance.
FURTHER PROCESSING
An objective when designing profiles is to create a shape that requires minimum post-extrusion processing. At the same time, further processing is often necessary. A benefit of alu-minium’s excellent formability is that processing can be inex-pensive due to competitive tooling costs.
Sapa is well-equipped in the area of high-speed machining. Its CNC-controlled multi-task machines have better dynamics and more efficient control systems than conventional machines.
Friction stir welding (FSW) joins profiles without creating seams, and without filler metals or shielding gases. Under high pressure, the clean metal surfaces on the profiles that are to be joined are pressed together. A rotating tool, which creates friction heat, is then pressed into the metal and moved along the line of the joint. The combination of pressure and heat results in a new, homogenous structure and in joints stronger than fusion-welded joints. FSW reduces thermal deformation and forms flat surfaces.
CASE STUDY
CASE STUDY
FORD TAKES THE LEAD
Lighter cars can accelerate faster, stop sooner and consume less fuel than heavier cars. This is common knowledge but even so¸ Ford Motor Company man-aged to surprise the automotive world by announcing that aluminium would be at the heart of its redesigned 2015 F-150 pickup.
The reason is simple: The F-150 has been the best-selling vehicle in the United States for the past 32 years, including sales of 753,000 units in 2014. Why change a winning formula?
Key reasons are fuel economy and vehicle perfor-mance. By switching from steel to an aluminium body for the new F-150, Ford could make the vehicle nearly 320 kilograms lighter – about 700 pounds.
Sapa delivers structural aluminium tubing for the new pickup and is providing Ford with ongoing devel-opment support for future aluminium extrusion appli-cations. A global team of Sapa engineers and metal-lurgists is contributing.
“We work hand-in-hand with automakers to help them make informed decisions when designing vehi-cles with aluminium,” says Jack Pell, vice president of commercial sales for Sapa’s extrusion operations in the Americas.
CASE STUDY
CASE STUDY
CASE STUDY
CASE STUDY
ALSTOM SPEEDS AHEAD
Alstom’s Euroduplex is the only double-deck very high-speed train capable of operating across several European rail net-works. It moves as fast as any train in the world, benefiting from lightweight car body shells which utilize aluminium solu-tions from Sapa.
Sapa won its first major contract with Alstom in 2007, and over the years it has increased its business with the France-based rail transport company. A new contract will take deliver-ies through 2018.
Alstom’s Euroduplex can move as fast as 320 km/h with high comfort levels and maximum safety. The main customer
for Euroduplex is the French national railway company (SNCF).
Sapa supplies more than half of the structural profiles used in the car body shells. Its Lichtervelde site in Belgium handles the shipments to Alstom’s manufacturing center for very high-speed trains in La Rochelle, France.
Sapa is responsible for the complex structural extrusions, which are as long as 19 meters, as well as machining and assembling the items in ready-to-ship kits. The company ships the products on special long-length trucks.
A NEW ADDITION TO THE CHICAGO SKYLINE
Chicago is known for its architecture and dazzling downtown skyline. The next addition will be 150 North Riverside.The Windy City knows all about skyscrapers, boasting five buildings that stand 300 meters or higher, including the 440 meter Willis Tower. Measured in these terms, the 54-story 150 North Riverside building will be a baby brother, but when it comes to sustainability it will stand tall.
Construction of 150 North Riverside started in September 2014. Goettsch Partners designed the project, which was
pre-certified LEED-CS Gold, to minimize energy consumption while maximizing light, air and open space. A high-perfor-mance floor-to-ceiling aluminium-based curtain wall system will contribute to the efficiency of the building.
Sapa is delivering 450,000 m2 of unitized curtain wall to
Clark Construction Group.
150 North Riverside is located in one of the city’s most prominent sites, along the west bank of the Chicago River. It is expected to be complete in November 2016.
150 North Riverside an environmentally friendly skyscraper. Photo: Goettisch Partners.
CASE STUDY
PRECISION
TUBING
LEADING
THE WAY
SALES 2014 SHARE OF GROUP TOTAL7%
NOK 3,649 million NUMBER OF EMPLOYEES SHARE OF GROUP TOTAL8%
1,818 PRECISION TUBING MARKET SHARE42%
globallySapa Precision Tubing supplies extruded aluminium round tubes, micro-port extrusions and welded aluminium tubes. We offer value to customers through high performance, quality, consistency, flexibility and overall economy. Our products are adapted for different types of heat exchangers: radiators, con-densers, heaters, oil coolers, charge-air coolers and air-condi-tioning systems.
Precision Tubing has close to 2,000 employees in Europe, Asia and the Americas. New investments in China and India
contributed to business growth in 2014, largely in the indus-trial segment, where aluminium is replacing copper in HVAC&R applications.
REGIONAL AND GLOBAL
Sapa is the only company with a regional and global presence that is dedicated to supplying aluminium tubing for heat exchanger applications. Our key customers include all major tier-one manufacturers of automotive heat exchangers. We have leading market positions in Asia, Europe, North America and South America.
Precision Tubing’s sales to the automotive sector accounted for most of its total volume in 2014. The global automotive market has experienced a strong recovery, espe-cially in North America, after the contraction that followed the global financial crisis. However, most of the business area’s increase in sales volume last year came from the HVAC&R segment, where material substitution is gaining speed.
Sapa has a global research and applications center with resources in Brazil, China, Denmark, Norway and the United States. It covers alloy and coating development, brazing tech-nology, corrosion design, simulation and testing.
Sapa Precision Tubing produces and sells
aluminium tubing for heat transfer
applica-tions, mainly for the automotive market, which
represents the vast majority of the total
mar-ket segment. Precision Tubing also serves
industrial customers, a growing market
seg-ment, and delivers applications for
transport-ing liquids and gases.
CASE STUDY
CASE STUDY
ALUMINIUM TO GOLD AT PANASONIC
A material substitution project by Panasonic’s air condi-tioning business unit led to a cost saving aluminium solu-tion from Sapa that won a gold award for outstanding per-formance.Aluminium is replacing copper tubing in industrial A/C units because the solutions are more cost competitive and offer better heat transfer performance. At the same time, the change requires careful planning, material selection and design of the new system.
Consequently, when Panasonic’s A/C business unit decided to make the switch to aluminium in the best way possible, it turned to Sapa to get the best support avail-able.
Panasonic’s project team selected the most advanced round tube developed by Sapa, the zinc-coated helical inner-grooved tube, a product which had been created with two new processes. The inner grooving increases sur-face area and thereby heat transfer potential, and the zinc coating improves the corrosion performance of the tube.
This combination provides an aluminium solution that exceeds copper in key performance indicators such as effi-ciency, corrosion resistance, weight and burst pressure, at a more competitive cost.
Panasonic acknowledged the work by presenting Sapa’s Precision Tubing plant in Suzhou, China, with its ECO-VC Gold Award for Outstanding Performance.
BUILDING
SYSTEMS
THAT SAVE
ENERGY
SALES 2014 SHARE OF GROUP TOTAL14%
NOK 6,866 million NUMBER OF EMPLOYEES SHARE OF GROUP TOTAL13%
3,074 BUILDING SYSTEMS MARKET SHARE19%
in EuropeSapa is at the forefront in the development of
aluminium-based products and solutions for
energy-efficient buildings. We offer systems
for curtain walling, doors and windows, as well
as specialist applications such as solar
shad-ing and buildshad-ing-integrated photovoltaics.
Customers range from contractors and
speci-fiers to designers and architects.
Building Systems’ activities are organized within three global brands – Technal, Wicona and Sapa Building Systems – and several smaller brands for local markets. While most of the 3,000 employees are located in Europe, the business area is developing a global presence, utilizing export links and estab-lishing local manufacturing facilities in new territories, includ-ing India and the Far East.
The building systems are utilized in the residential sector and in offices, industrial facilities and other commercial buildings. Products are adapted to national and regional regulations, local building customs and, to an increasing degree, individual projects. Sapa’s systems provide this flexibility in a cost-effec-tive manner thanks to families of products with interchange-able components that can be individually adapted.
Sapa offers extensive coverage and s
